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Mises Economics Blog

Software Patents are not that harmful!

September 20, 2006 1:52 PM by Stephan Kinsella (Archive)

A patent blog post: Have Patents Killed the Software Industry in the U.S.? Hardly.

In the early 90's, the software industry in the U.S. decried the rise of software patents, claiming that patenting would doom small companies and stifle growth in the industry. ... Anti-patent activists, particularly in the EU, have used many of these comments as fodder for their quest to eliminate software patents altogether. They have even gone a step further in their rhetoric, suggesting that it will be impossible for software companies to operate once software patents are recognized, since larger sompanies will swamp the smaller sompanies with patent filings and litigation.

However, a current study being conducted by Robert P. Merges, demonstrates that this viewpoint is mostly wrong - patents have not killed the software industry, they have not led to a slowdown in entry, and they appear to have had a negligible impact, if any, on industry structure.

Wow, what a strong argument for patents: they have not harmed the software industry that much. Of course, this does not imply the patent system has no costs; or that the costs are exceeded (somehow) by the benefits of the system (in fact if it has no effect, that means it has no benefits, right?). For more on this, see There's No Such Thing as a Free Patent.

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Comments (10)

  • Hugh Akston

    Yet another case of the seen and the unseen. Who knows what new or better software would be available if engineers were spending time writing code instead of writing patent disclosures and figuring out how to code around patents.

    Published: September 20, 2006 9:32 PM

  • PR

    I wonder if the study takes into account the fact that software patents have been used mostly for defensive purposes so far. Companies like IBM and Microsoft accumulate patent portfolios to cross-license with each other and fend off lawsuits from smaller technology companies. One could just as easily claim "Nuclear weapons not that harmful" based on similar evidence. However, should one of these big patent-holding companies start to lose badly in the marketplace, they could very well decide to push the button, so to speak, bringing the industry to a grinding halt.

    Published: September 21, 2006 7:31 AM

  • Kurt

    "...patents have not killed the software industry, they have not led to a slowdown in entry, and they appear to have had a negligible impact, if any, on industry structure." I think the most important question is again neglected: what about the negative effect of the patent system for me, the consumer?

    Published: September 21, 2006 11:40 AM

  • Francisco Torres

    what about the negative effect of the patent system for me, the consumer?

    Indeed! Alas, Kurt, such questions are not asked by the pro-patent people. They assume that innovation and R&D would not be possible without patents because there would be no incentive to invest in such activities. Tell that to the oil companies, which spend millions upon millions on oil exploration, without certainty of success AND without patents to help them control the selling price - and yet they keep doing it! The true believers disdain this argument by relying on the non-sequitur "it is not the same thing".

    Published: September 21, 2006 12:46 PM

  • Nick Bradley

    There is no empirical evidence that the patent/copyright system spurs R&D and creativity. For an excellent example, compare the innovation and creativity seen in patented software vs. open-source. Virtually ALL of the innovative new software programs and services are open-source: Google Apps, P2P, Firefox, Apache Servers, etc. The last "killer app" normally associated with patented software, the browser, was originally designed in the open-source community (Mosaic-Netscape Navigator)! The graphicual user interface (GUI) was also open-source. I think the only reall "killer app" that was actually patented was Windows 95 and associated MS Office products at the time. The lack of killer apps since that time hasm I think, slowed down growth and innovation in the computer industry as a whole. In fact, the only venues that have spurred consumers to upgrage their systems has been the emergence of P2P file sharing (open-source). Imagine if there were no software patents; the killer apps would have kept coming and the ISP and computer industries would have kept up with it.

    As far as creativity and copyrights go, compare the liveliness, intelligence discussion, diversity of opinion, and new ideas that come out of blogs with the stale old newspapers, magazines, and journals on the net.

    Has anybody ever wondered why EVERYBODY outside of Hollywood thinks actors get paid too much? Because movie industry profits are monopolistic in nature due to the copyright-patent system; Americans can smell that something ain't right with the systemWithout the copyright-patent system, Studio profits would come down dramatically and so would the salary of actors and directors.

    Published: September 22, 2006 7:00 AM

  • Jon

    "Observing" no negative effect of software patents is a good example of the Bastiat Broken Window Fallacy.

    Published: December 23, 2006 1:38 PM

  • Sasha Radeta

    Why are you "reviving" this old thread that really does not deserve it?

    I mean what is the main argument here... that patents are bad because they didn't kill software industry? Those free and unrestricted violations of terms of use would benefit developers by taking away their profit motivation - instead making them focus on benevolence and solidarity.

    What else do we have on this thread...

    - Hugh Akston can is trying to imply the following: who knows what new or better product would be available if producers were spending time innovating instead of protecting their property and figuring out how to work around someone else's property rights. He neglects that what is "unseen" is the fact that authors want to protect copyright precisely because they want to protect their own motivation for authorship.

    - PR compared patents to nuclear weapons, claiming without a shred of evidence that when patent-holding companies start to lose badly in the marketplace, they bring the marketplace to a "grinding halt" (I guess when young Microsoft started beating other patent holders they were just lucky).

    - Kurt is implying that consumers are affected negatively by patents, implying that (holding demand ceteris paribus) without any protection of terms of use we would have greater supply of new inventions (willingness and ability of developers). In other words, he claims that by reducing profit incentive and bringing prices down to zero - we would stimulate more production. Communists claim the same, also without any evidence.

    - Francisco Torres reminds on how oil companies are motivated to seek new oil discoveries without any patents, but he does not say that oil companies would not do so without the private property protection that allows them to control the supply of their own products. When the inventors insist on control of commercial use of their own products – they act in accordance with private property rights over that use. If oil companies “drilled” new technologies instead of oil – they would also seek the way to control the supply of their goods and services – which is perfectly justifiable.

    - Nick Bradley fails to see that many "open source applications" are bundled with other products and services, using software as their marketing tool. Advertisement may be free of charge - eureka! So why don' everyone else switch to "open source". Again, we have someone who thinks that he knows best what's good for most of producers who don't have any interest in allowing others unrestricted use of their products.

    To further prove his point, Nick is saying that ramblings on this blog, especially by the author of this thread, are superior to works in scientific journals. What a joke.

    - Finally Jon is referring to the Bastiat's Broken Window Fallacy. I guess he will provide an explanation one he thinks of one.

    ----

    So Jon, what was the point to all this?

    Published: December 23, 2006 2:36 PM

  • alexander

    To everyone commenting here about the fallacy of patent rights.......go do business outside of the U.S in countries that have none, when your hard work get's taken out from under you....you'll understand why people want to do business in the U.S. My god......some of you are living in another world.

    Published: May 14, 2007 2:49 PM

  • Egzoz

    Thanks dude.

    Published: June 12, 2007 4:46 AM

  • george

    u

    Published: February 9, 2009 4:41 AM

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